Inflation On The Rise…Again?

Inflation has been a major economic concern over the past couple years and the FED has been raising rates ever since fears surfaced. But with recent inflation reports, are rates still going to be going up?

Reports show that lending activity from banks continues to decline, which has also seen lending standards become tighter for consumers. It’s now harder to obtain financing, similar to the Great Recession of 2008 and most recently, the Covid-19 recession in 2020. What’s the takeaway? If it’s harder for consumers and businesses to borrow, that means less economic activity which could lead to an economic slowdown.
 
But then there’s the inflation front. After seemingly bottoming in early summer, inflation looks to be on the rise again as the monthly Consumer Price Index jumped in August and September while oil prices buoyed up once again. Higher oil prices lead to higher prices at the pump which is an added tax on the consumer with higher prices everywhere, which is seen as inflationary.
 
The job market has been all over the map.
 
So with these factors at play, what will give and how will it affect rates? As of now it seems the FED is posturing to potentially continue hiking rates and holding them higher for longer than initially expected. We’ll have to see if that stance persists, and of course brace for a potential economic slowdown.
 
A lot of questions yet to be answered as 2023 comes to a close.
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